State, business need to ramp up transformation

WITH AN unabated deficit of women in management and leadership positions, more opportunities should be created for women to lead in business. In today’s working world, it is blatantly obvious that gender transformation, particularly in the metals and engineering sector, is slow. It is also no secret that men continue to dominate top and senior management positions.

Although a dire situation, it still has the potential to change, albeit at a marginally slow rate as indicated by the 16th annual “Workforce profile for Manufacturing by race and gender”. The analysis, published in June, compared 2014 and last year’s statistics on race and gender. It found a slight increase in the representation of women of all races at top management.

Although positive, this small jump merely serves to confirm that the female talent pool continues to remain underutilised. The exclusion of women and their skills in the workplace, especially in senior management positions, is a worldwide phenomenon and not unique to South Africa.

Their entry into such decision-making positions is rife with well-known barriers. In their effort to break through into leadership, women have to fight cultural stereotypes, ingrained mindsets and stubborn forms of behaviour. Not helping matters is the tendency to tap a narrower band of women leaders than is possible, given the available talent pool.

South Africa noticeably only has 17.4 percent women board directors, the second largest in Africa – yet a far cry from the tangible potential to increase that crucial headcount to above 20 percent.

Empower

Businesses need to empower more women to step up and be heard, to be included for their knowledge, talent and skills and the value they can bring to the business when they are placed in high-level positions. Regrettably, such opportunities are scarce.

The paucity of women directors is due, to some extent, to companies’ lack of understanding of the need for and benefits of diverse boards. Perhaps it should be compulsory to include at least a minimum of three women on company boards, thus resulting in an improved tone in board discussions.

South African women hold less than 4percent of chief executive positions on JSE-listed firms, while data illustrates that gender diversity can add value to a company. Contrary to popular belief, companies with the highest percentage of women on boards tend to outperform those with lower percentages of women on boards. This includes higher returns on sale, a greater return on invested capital and a higher return on equity.

While there is little change in gender inclusivity on the local bourse, some gains are being made in government corridors.

The 2015 report by Women Board Directors of Africa’s Top-Listed Companies further highlighted the fact that South Africa has succeeded, since 2005, in ensuring that at least 30percent women directors serve on the boards of state-owned enterprises (SOEs). The 2012 Business Women’s Association Census recorded 33 percent women’s representation on SOE boards, proving the effectiveness of this mandate. This is meaningful transformation.

The law, however, does not cover listed companies. As a result, without a similar framework, the percentage of women directors on the country’s blue chip index, the JSE Top40, has stalled at 17.4percent.

One, then, is confronted with the obvious question: if transformation makes business sense, why are companies not addressing this issue?

Legislation, although not always easy to implement, could be one of the answers to drive the inclusion of women in economic decisions, which will add to diversity. The government has made gender equality and women’s empowerment central to its transformation. For example, access to formal employment for women is facilitated through the Employment Equity Act and Sector Charters through which employers are legally required to work towards more equitable representation based on gender, race and disability.

Adding to the campaign is proposed legislation introduced by the Ministry of Women, Children, and People with Disabilities to “establish a legislative framework for the empowerment of women; align all aspects of laws and implementation of laws relating to women empowerment, and the appointment and representation of women in decision-making positions and structures”.

Demographics

At the same time, there is the Women Empowerment and Gender Equality Bill calling for equal representation (50 percent) on boards of all public and private corporations. If passed as currently written, all companies – listed, private, and state-owned – would have to provide a plan for increasing the percentage of women board directors towards 50percent.

The King Code of Governance Principles and the King Report on Governance for South Africa (or King III) includes gender as an important factor to be considered when appointing directors. It recommends that a board consider “whether its size, diversity and demographics make it effective”. Even though the writing stares at us in black and white, criticism and complaints continue regarding the potential effect some pieces of legislation and charters could have on companies, employment and the economy.

Should we really have to prescribe to corporate boardrooms? Apparently, we do, because we fail to realise that transformation makes business sense.

We need to banish the thought that things cannot remain the same. Diversity and inclusion must become a boardroom imperative and norm. Under-representation of women is not new – it is a matter which gets ignored in business, even with a plethora of legislation with the spirit and intent focused on change. This remains a pervasive issue.

That women are not suitable to leadership is an excuse to maintain inequitability and avoid necessary change.

Businesses and government need to ramp up the campaign to provide opportunities to ensure that women get the experience they require to be appointed to top and senior positions and represented on boards. These could include work-integrated learning training, executive coaching, mentoring and sponsorship programmes, to name a few.

If transformation does indeed make business sense, then perhaps we should hold government and business to account as we move towards real and lasting change in the interests of moving South Africa forward. Let us not wait for many more years for equitable representation in the labour market to take effect.